10 April 2025 PE Watch | Latest developments and trends, April 2025 On 18 March 2025, the Swiss Federal Tax Administration (FTA) released Communication-023-E-2025 , addressing the tax treatment of permanent establishments (PEs) under the Global Anti-Base Erosion (GloBE) rules and Switzerland's Minimum Taxation Ordinance. The FTA clarified that, according to the GloBE rules, Swiss PEs of foreign entities are considered Constituent Entities of a Multinational Enterprise (MNE) group and are subject to minimum taxation requirements in Switzerland (while domestic PEs of Swiss entities are not). However, under Swiss domestic law, a PE lacks legal personality and neither has legal capacity nor the capacity to act. Consequently, although the GloBE rules treat foreign PEs as separate entities for minimum taxation purposes, Swiss law assigns tax liability and procedural obligations to the foreign head office. This means that any Top-up Tax and related compliance responsibilities for a PE operating in Switzerland fall upon its foreign head office.
Document ID: 2025-0858 | ||||
